§ 5. Mr. Stanley
asked the Secretary of State for Trade what representations he has received from the insurance industry on the Policyholders Protection Bill.
§ 18. Mr. McCrindle
asked the Secretary of State for Trade how many representations he has received on the Policyholders Protection. Bill since its publication.
§ Mr. Stanley
In view of the considerable disquiet which has been expressed by hon. Members on both sides of the House about the underlying principles of 994 this Bill, will the Secretary of State say why a decision was taken to introduce the Bill in another place? Secondly, will he assure the House that he retains an open mind towards the principles of the Bill, and that if the insurance industry can convince him of the soundness of its alternative proposals he will be willing to drop the Bill which has been introduced?
§ Mr. Shore
I hope very much that the House and, indeed, the other place, where the Bill has been introduced, will really consider the measure on its merits and against the actual situation that has faced a number of insurance companies during the past year—a situation which I do not feel we can assume has entirely disappeared. The whole purpose of the measure is, after all, to give some consumer protection to the insured, and the scheme that we have put forward will be found, on examination, I hope, to have far fewer demerits than many people suspect and far more merits than many have so far acknowledged.
§ Mr. McCrindle
Is it not significant that, having considered the Government's proposals, almost the whole of the insurance industry, including the Co-operative Insurance Society, should be opposed to them in large measure? Is it really too late, even now, for the Secretary of State to try to reach a voluntary agreement with the insurance companies which would achieve his objective of consumer protection but would at the same time ensure that companies would not be encouraged to offer uneconomic terms to policy holders knowing that if they get into trouble they will be bailed out by the contributions of other policyholders?
§ Mr. Shore
There are genuine weaknesses in the scheme put forward by the insurance industry. I am afraid that it was put forward rather late in the day. I wish that the industry had been persuaded to act earlier. But I must tell the hon. Gentleman that the basic objection that he puts forward to my scheme would, in a sense, be the same objection that could be put forward to the industry's own scheme—that is, the whole principle of there being a fall-back, a guarantee, for people who are either unfortunate enough or unwise enough to invest in unsound or imprudently managed insurance companies.
§ Mr. Ernest G. Perry
Is my right hon. Friend aware of the grave concern and disquiet felt by all those working in the industry at some of the clauses of the Bill? Will he give an assurance that if the trade unions and other organisations represented in the industry want to see him about them, he will seriously consider the clauses that are causing most of the concern which has arisen about the Bill?
§ Mr. Shore
I listen to my hon. Friend with particular attention when he speaks on this subject, because of his great experience in the industry. I am aware of the disquiet. As he will know, I have already had the opportunity of discussing the purpose of the Bill and some of its major principles with many people, including representatives of trade unions and certainly representatives of co-operative interests, and with the insurance industry itself. I assure my hon. Friend that I am quite willing to consider further whether we can resolve particular difficulties, but I would add that I believe, as I said earlier, that many of the anticipated worries that people have will, on inspection and on proper examination in the other place, be shown to be based, perhaps, upon a misunderstanding of some of the major features of our proposals.
§ Mr. Higgins
Is it not the case that the Secretary of State's only response to the full day's debate we had and the criticisms made on that occasion was to introduce the Bill in the House of Lords rather than in the House of Commons? Does he not recognise that the Bill as now drafted clearly removes the incentive for people to take out policies with prudent companies? It is not only a question of protecting policyholders, which is clearly important; it is a question of which policyholders are being protected. It removes the incentive for people to select firms which are prudent and will lead to a situation in which the only thing people are concerned about is the lowest premium or the highest benefit, regardless of the risk involved, because they know that the Government will bail them out.
§ Mr. Shore
I understand the problem, but the difficulty that we have to confront is that any scheme put forward for insuring policyholders from the consequences of the collapse of an insurance company contains the danger of removing the fear 996 of unwise investment. Of course there is that problem. But I think that the right answer is not to say "caveat emptor", because one is dealing with many people of only modest resources, who have not necessarily got the best advice, and when they obtain advice it is often mistaken advice. That is not the right advice to give. What the hon. Gentleman should be urging me—which I should be willing to accept—is to develop and use the powers for regulating the industry which I have under the previous Conservative Government's 1973 Act, to do my utmost to see that insurance policies and insurance companies are properly and prudently managed.